Construction Claims and Dispute Resolution

Construction claims and dispute resolution are critical components of the construction industry. In this explanation, we will explore key terms and vocabulary related to construction claims and dispute resolution in the context of a Graduate Certificate in Construction Law and Dispute Resolution.

1. Construction Claims: Construction claims refer to demands or requests made by a contractor, subcontractor, or owner for additional time or money due to changes, disputes, or unexpected events that occur during a construction project. Construction claims can arise from various sources, such as changes in the scope of work, delays, disruptions, defective work, or differing site conditions. 2. Change Orders: Change orders are written documents that modify the scope of work, price, or schedule of a construction project. Change orders are typically used to address changes in the project's design, scope, or requirements. Change orders must be agreed upon and signed by both the owner and the contractor.

Example: A contractor may submit a change order to an owner to add a new bathroom to a project, which would modify the scope of work, price, and schedule.

3. Delay Claims: Delay claims are construction claims that arise when a contractor or subcontractor experiences delays in completing their work due to factors outside their control. Delay claims may result in additional time and costs for the contractor or subcontractor.

Example: A delay claim may arise if a project is delayed due to inclement weather, late delivery of materials, or changes in the design.

4. Differing Site Conditions: Differing site conditions refer to conditions that differ materially from those indicated in the contract documents, such as soil conditions, groundwater levels, or environmental conditions. Differing site conditions can result in additional costs or time to complete the project.

Example: A contractor may submit a claim for differing site conditions if they encounter rocky soil where the contract documents indicated sandy soil.

5. Dispute Resolution: Dispute resolution refers to the process of resolving disputes between parties involved in a construction project, such as owners, contractors, or subcontractors. Dispute resolution can take various forms, including negotiation, mediation, arbitration, or litigation.

Example: A dispute may arise if an owner refuses to pay a contractor for work performed, and the contractor submits a claim for payment.

6. Negotiation: Negotiation is a form of dispute resolution that involves direct communication between parties to reach a mutually agreeable solution. Negotiation is often the first step in resolving disputes before moving on to more formal dispute resolution methods.

Example: A contractor and owner may negotiate to reach a settlement on a payment dispute without involving a third party.

7. Mediation: Mediation is a form of dispute resolution that involves a neutral third party, known as a mediator, who facilitates communication between parties to reach a mutually agreeable solution. Mediation is often less formal and less expensive than arbitration or litigation.

Example: A mediator may help a contractor and owner reach a settlement on a dispute over change orders or delays.

8. Arbitration: Arbitration is a form of dispute resolution that involves a neutral third party, known as an arbitrator, who hears evidence from both parties and makes a binding decision. Arbitration is often faster and less expensive than litigation.

Example: An arbitrator may hear evidence from a contractor and owner on a dispute over delays or defective work and make a binding decision.

9. Litigation: Litigation is a form of dispute resolution that involves filing a lawsuit in court. Litigation can be expensive, time-consuming, and unpredictable.

Example: A contractor may file a lawsuit against an owner for breach of contract or non-payment.

10. Liquidated Damages: Liquidated damages are pre-determined damages specified in a construction contract that a party will pay if they fail to meet their contractual obligations, such as completing work on time or to a certain standard.

Example: A construction contract may specify that a contractor will pay liquidated damages of $500 per day for each day that they are late in completing the project.

11. Backcharges: Backcharges are charges that a contractor or subcontractor may make against another party for work that was not performed or for damage caused to the project.

Example: A contractor may issue a backcharge to a subcontractor for failing to install insulation to the required